Friday, February 5, 2010

On February 1, 2010, two married owners and operators of CHH Medical Supply, a Los Angeles-area durable medical equipment (DME) company, were sentenced to prison today in connection with billing fraud relating to "power wheelchairs." This sentence came after they were convicted in a federal court jury trial in July 2009.

In Los Angeles, there are numerous current investigations relating to DME fraud and many more indictments and prosecutions are predicted.

Gevork Kartashyan and Eliza Shubaralyan, husband and wife, were each sentenced to serve two years in prison by U.S. District Judge Stephen V. Wilson of the Central District of California. In addition, Mr. Kartashyan and Ms. Shubaralyan were ordered to serve three years of supervised release following their prison terms and to pay $400,000 in restitution, jointly and severally.

At trial, Mr. Kartashyan was found guilty of conspiracy to commit health care fraud and health care fraud, and Ms. Shubaralyan was found guilty of health care fraud. At trial, evidence was presented showing that this couple, through their company CHH Medical Supply, billed Medicare $949,859 and were paid $597,750 as a result of the billing. There was evidence presented at trial that most of this the billing was for medically unnecessary power wheelchairs and wheelchair accessories. The power wheelchairs were delivered to the Medicare beneficiaries but that they were not needed and, in some cases, not requested.

There was a parade of witnesses at trial. First, elderly Medicare beneficiaries testified about how they were recruited into letting the DME company use their the scheme. According to testimony, the beneficiaries were taken to Los Angeles-area medical clinics, where they turned over their Medicare numbers and other personal identifying information. Some beneficiaries testified that they were promised vitamins, diabetic shoes and other items that they never received, in return for providing their beneficiary numbers.

There was other evidence presented at trial that these clinics were in the business of generating fraudulent power wheelchair prescriptions that could be sold to DME company owners -- who then billed Medicare for the wheelchairs. There was testimony presented that many of the beneficiaries did not know they were getting a power wheelchair until it was delivered by CHH Medical Supply. All of the beneficiaries who testified at trial said that they did not need or use the power wheelchairs.

In addition, five physicians testified at trial that they never authorized or approved the power wheelchair prescriptions written under their names. Three of these physicians testified that they never worked at the clinics listed on the phony prescription pads.

There was testimony at trial that Mr. Kartashyan regularly purchased power wheelchair prescriptions. The evidence also showed that after the power wheelchairs were delivered, Mr. Kartashyan generated phony forms stating that the beneficiaries’ homes were appropriate for the use of a power wheelchair, even though no home assessment was conducted.

Attorney Commentary: Some DME providers when prosecuted for health care fraud believed that since the wheel chairs or other DME (such as hospital beds or other equipment) were in fact delivered to the patients and there was a prescription -- there was a complete defense on the criminal fraud case. Every case is different but a prescription and delivery does not guarantee immunity or a defense verdict in these cases.

A full assessment is necessary to evaluate whether there are illegal kickbacks, medical necessity, and other facts that could be used to show fraud. This assessment should be done early in the case before or just after search warrants are executed or subpoenas are served.

Consultation with an experienced health care fraud attorney is important in evaluating whether there are viable defenses and whether investigation and expert witnesses should be employed at an early stage.

Any questions or comments should be directed to Tracy Green at tgreen@greenassoc.com. Tracy Green is a principal at Green & Associates in Los Angeles, California. They focus their practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing licensed health care providers including, but limited to, DME providers in regulatory and health care fraud related matters. Their website is: http://www.greenassoc.com/

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